THE ALLURE OF TAX CUTS — apparently being dangled by Coalition figures in sections of the press — provides more evidence (were it needed) of a directionless, ham-fisted and shambolic sales and marketing effort on the federal budget; already badly damaged by a poorly received budget which opponents have successfully branded as worse than it is, the hint of tax cuts to come now presents as a travesty of competence, or as desperation.
So which is it?
I guess someone on my side of the political fence has to point these things out, and it might as well be me; readers will know how angry I have been about some elements of the Abbott government’s first budget, notwithstanding the fact I nonetheless think its overall direction is generally sound.
But whether readers, other Coalition figures (or the people in Tony Abbott’s office who really run this government) agree or not that re-indexing fuel excise is an obscene breach of faith with Liberal voters in abandoning a compact struck with them by a Liberal government, or that a so-called “deficit levy” sends an appalling signal that the Coalition is as ready to plunder anyone earning more than the average wage as Labor and the
Communist Party Greens are, one thing nobody can really refute is the fact that Treasurer Joe Hockey’s maiden budget has been the most appallingly sold since the infamous 1993 effort of the Keating government.
Coming after six budgets tabled by Wayne Swan, that is an extraordinary achievement, and nothing to be proud of.
I think I should level with readers about something: after the election of the Abbott government — and with a big project I’d been working on in my media business going nowhere — I put my hand up to serve in an advisory capacity to the government, but was rejected without so much as a telephone conversation by the central vetting operation conducted by Abbott’s Chief of Staff, Peta Credlin, and the Liberals’ “Mr Fixit” of the past decade (and now state director of the party in NSW), Tony Nutt.
Fair enough: after all, it’s their game; they knew the kind of people they wanted reporting to them, and I’ve revisited my business interests since then. And I still get accused of blind bias and favouring the Liberal Party too often for anyone to simultaneously accuse me of indulging in pointless dummy spitting. But the episode drastically hardened my resolve to call things as I see them, and blessed with the skills in sales, marketing and communications that are so obviously defective in whoever it was that got the government roles, I think I’m more than entitled to speak my mind.
Anyway, enough of the disclosure — let’s get back into it.
And I will ask people to bear with me as I lay out the case tonight; it is (and was) something of a process to background why this latest piece of insanity will do nothing to help the government despite whatever good intentions that might underpin it.
The Fairfax press is carrying a leading article today that quotes “sources and senior government figures” — typically, on condition of anonymity — suggesting that voters will be offered tax cuts in the runup to the 2016 election; that not only were these always going to happen in 2018-19, but that an additional tranche of tax cuts could be offered in the 2016 budget as an easing of the austerity measures being implemented now to provide voters with some relief once the heavy lifting has largely been done.
If this story is true, it closes the circle on the 2014 federal budget as one of the most poorly crafted, ill-directed and abominably sold political efforts of recent times, and in decades by a conservative government.
I think everyone (including the advisory bloc inside the government) now agrees — to varying degrees of public acknowledgement — that Prime Minister Tony Abbott needlessly boxed himself in prior to last year’s election, with excessive promises about what would be insulated from spending cuts when the election was as good as in the bag.
The Liberals’ election win was still as good as wrought in stone after Kevin Rudd was restored to the Labor leadership: the messiah the polls suggested would rescue the ALP proved a red herring within weeks of his return, as forecast in this column months earlier, and indeed Rudd himself probably sealed Labor’s fate with a series of measures aimed at making it look competent (the car industry, for example, is a case in point).
Be that as it may, I have consistently argued that despite the qualifications and unnecessary promises to spare the knife, Abbott was nonetheless elected with a mandate to fix the budget, and to do it by cutting profligate Labor spending. Until a month or so prior to the May budget, the only voices disputing this contention publicly were Labor voices.
Yet as the budget drew closer, all sorts of nasties were allowed to circulate in a ridiculous and overblown exercise in kite flying; readers know I was supportive of the co-payment idea of Medicare visits for a long time — especially when it was pitched as a $5 fee to see a GP.
But the $5 co-payment became $7; overnight, it extended beyond bulk-billed GP visits to scans, pathology and hospital emergency department services; and having received a neutral reaction when it was first floated, the reality that emerged was far harsher than the basic premise the Coalition had experienced a (surprisingly) benign initial response to.
Conversely, the “deficit tax” was allowed to circulate for weeks with an income threshold hanging off the idea of just $80,000 per annum; the fact it is now slated only to apply to those earning $180,000 or more matters nought. The signal has been sent: not only will the party of low taxes impose new and higher taxes, but the notion of a Liberal government actively targeting its middle-earner heartland was permitted to circulate, without refutation, for too long.
The fact it was canvassed at all will send a shudder down the spines of some loyal Liberal voters, who must surely wonder whether they’re next if the budget fails to achieve its objectives.
Of course, other putative nasties that materialised in the budget, on cue, were afforded similar kamikaze opportunities to crash into the government on their way back down.
And I maintain that things that should have been abolished altogether or slashed beyond recognition — the National Disability Insurance Scheme and its eventual $22 billion annual price tag first and foremost — were left untouched purely because increasing taxes is the squib’s option when alienating a vocal lobby is seen as an unpalatable path to take.
Well, guess what? Despite any merit the NDIS might have, it is completely unaffordable, almost completely uncosted, and whilst this is going to sound nasty and isn’t intended to, the disability welfare lobby doesn’t vote Liberal and never will.
So much for taking the soft option: those who would never support the government in a pink fit were given comparatively little to get angry about, whilst the bulk of its own base was explicitly targeted. What a brilliant political strategy!
Still, there has been an enormous amount of disinformation, mischief-making and sheer bloody-minded lying about the government’s budget by Labor, the Greens, the unions, and virtually every self-interested group with an axe to grind and/or a snout in the trough. The government and its media unit has to date proven unwilling — or unable — to effectively refute them.
Which is a surprise to some extent, because one of the pieces I have published in the aftermath of the budget focused in part on Joe Hockey’s appearance on the ABC’s QandA programme; you could see the Left-skewed audience was sceptical, and it’s a credit that Hockey fronted it. But so assured were these people that the pronouncements of Labor et al on the budget were honest, factual and correct, it was written all over their faces throughout the programme that whilst Hockey’s answers to their questions were obviously what they wanted to hear, they didn’t believe him — because what they’d heard from someone else first was more convincing.
Here, of course, we’ve been talking about the budget for the past month; defending large portions of it and lambasting others, but with the overriding message that Labor’s financial management mess — and the growing mountain of debt left behind — simply had to be addressed. Readers can go back through the archive section of the site for May and late April if they missed any of those pieces.
But there hasn’t even been a co-ordinated attempt from the government to slap down Labor’s latest exercise in self-absolution; its viral marketing campaign — suggesting it was a “low tax, low spending, low debt government” has hit my social media inboxes at least half a dozen times in the past fortnight alone. What do the Liberals send out? A centrally generated email from “Tony Abbott” or “Joe Hockey” which is all blather, and that if I wasn’t a member of the party, I wouldn’t even see.
The hard cost to date of the budget has been a crumbling of the government’s numbers in reputable opinion polling. This may or may not be a temporary blip; time will tell, and whilst the Prime Minister’s office and its lieutenants will probably disagree, the fact certain items were included in the budget at all — those that targeted the core Liberal vote and, indeed, appeared almost deliberately designed to enrage it — makes the prospect of recovering support in time to win an election in 2016 exponentially more difficult than a “horror budget,” considered at face value as a concept, might otherwise have made it.
Now, here come the tax cuts.
According to the brave and sage figures within the government who dare not speak their names, tax cuts were always part of the plan; “quietly factored into the budget papers from 2018-19” is how Fairfax describes them.
The point ought to be leaping off the screen at this juncture: why quietly hide the goodies away from view? Why weren’t eventual tax cuts on the table at the very commencement of the budget process? Certainly, there was no attention drawn to them. Nothing definite. Nothing tangible. I think the vague reference to tax cuts in several years’ time was in fact made, but you don’t leave the key selling points out of your main pitch to chase the prospect down with after the presentation, when he/she has already gone cold, as a virtual afterthought.
The fact this is being raised now — indeed, with the promise of early delivery in time (surprise, surprise) for an election campaign — invites one of two responses.
One, that this budget really has been so badly managed and sold that the government and its advisers can’t even shine a light on the more positive aspects of its plan; the reason I have walked readers through the entire process of the past couple of months is because, taken as a whole and viewed as a sales and marketing exercise that is very much incumbent upon governments to engage in, the entire process has been shambolic, poorly contrived, and an appalling textbook example of how not to sell something. One could charitably describe it as a complete cock-up.
And two, that tax cuts are now being discussed at all simply indicates the Liberals are desperate, struggling, and frightened, and that fearing the electoral consequences of their efforts to date, a fat bag of bribes is being readied to slam down on the table for voters’ perusal.
Yet just like everything else about the Abbott budget, the whole tax cut scenario that Fairfax has fired the starter’s gun on carries a very big risk: that most voters will arrive at the conclusion that both of those responses are true and, repulsed, the damage already showing up in the Coalition’s numbers will simply be compounded.
None of this was necessary. The discussion we are having over this shouldn’t have had to occur. A budget campaign from the outset — despite the limitations Abbott placed on himself and a Liberal government — could have talked about sacrifice and reward in equal measure; quantified the short-term nature of the worst of the austerity measures; and actually targeted those measures to areas that were far less explosive in terms of its own political bedrock.
And that’s before we even begin to talk about how the budget should have been sold. A subject for another day perhaps, despite the fact that time (and opportunity) have already been well and truly lost in that regard.
But one thing readers can be sure about is the fact that for tax cuts to be floated around the place just a fortnight after the budget was delivered, some of those people recruited to Coalition ministerial offices are now very, very worried. And that, too, need never have happened.